Businesses in the rail industry are citing a ‘slow start’ to CP7 as a contributory factor to a downfall in trading over the last few months.
The latest Control Period started in April 2024 – with more than £45bn set to be spent on works up to 2029.
Now, in February 2025, businesses have stated that ‘lower-than-expected’ activity during this period have contributed to a downturn in work on the railways – with some businesses diversifying into other sectors to maintain their workloads and retain staff as they hope to pick up further work in the 2026 financial year.
REACTION SO FAR
In its Trading Update dated 24th January, Renew Holdings, said: “As indicated in the Group’s final results announced on 26 November 2024, trading within the rail sector has been impacted by the slow start to the Control Period (“CP7”), which commenced in April 2024. This lower-than-expected level of activity has continued in recent weeks, as has been widely reported. Consequently, trading in the Group’s Rail sector is now behind management expectations.
“Given the ongoing challenges with delay and deferment in our Rail activities and more recent uncertainty over timing of the commencement of a number of renewals programmes, the Board anticipates full year trading will be below market expectations albeit adjusted operating profit is still expected to be ahead of prior year (2024: £70.9m). Having operated in this sector through previous control period transitions, we believe that this situation will normalise as we move through the cycle. Our clients remain committed to record levels of expenditure in renewing and maintaining the national rail network to satisfy their regulatory obligations.”
In its Trading Update dated 3rd February, Speedy Hire, said: “The delay in CP7 rail works has also had an impact on trading in the final quarter but remains a significant opportunity for the Group into FY2026.”
In its Trading Update dated 29th January, Van Elle said: “Market conditions remain challenging in several sectors. Housing is showing signs of recovery and, despite the slow start to Control Period 7, our rail activities are increasing due to our diverse spread of customer relationships and ongoing TransPennine Route upgrade works.”
Smaller rail suppliers are also reporting issues with delays to spending. Late last year, Digisig Rail said that it has experienced some companies ‘going bust due to a lack of work.’
As a result, it says “Contractors are now hesitant to invest in resources, staff & training without clear project timelines, which is compounding financial strain.
“These delays are severely affecting contractors, especially smaller ones, by creating large gaps in project pipelines leading to business failures.”
COMBATTING THE ISSUE
As highlighted by Digisig, a lack of lookahead and work pipelines can be detrimental to smaller businesses, some of whom have either diversified into other industries, or ceased trading entirely.
As work spend slows, there is also a risk that the rail workforce look to use their skills in other sectors to compound an already growing skills gap.
However, there are trade bodies partnering to work collaboratively with Network Rail to support rail contractors during this time.
Don Clarke, Independent Chair for the Rail Industry Contractors’ Association, said: “We continue to maintain strong communication with Network Rail and other Trade Bodies to support rail businesses with lookaheads and pipelines which will give some certainty for businesses allowing them to adequately recruit, train and resource frontline staff to be able to complete these works as CP7 spend starts to increase.”
“While we understand the challenges faced by Network Rail, we are also at a critical crossroads for many small businesses working in the rail industry – who need assurances to be able to maintain skilled workers for these roles and essentially keep the lights on. As one voice, RICA’s members are best placed to convey their concerns to buying organisations and work together for better outcomes for the industry. We urge contractors to get involved with RICA to support further momentum within CP7.”
Are you a rail business affected by the reported ‘lower-than-expected’ activity so far? We want to hear your story and your thoughts. Email dan.clark@railindustryconnect.co.uk to discuss.
If you would like to join RICA, email Don Clarke on don@dongroup.co.uk for more information.
